WIP8-2 (Depreciation) You are studying with some classmates, and you are reviewing each others responses to the following questions: Why do companies depreciate their equipment? What does it mean if the straight-line depreciation method is used? What does the carrying amount of equipment represent? A classmate responded as follows: Companies depreciate their equipment because they need to see how it should be priced should they choose to sell it. The straight-line method is where the equipment is where the equipment is depreciated equally each year, with the carrying amount of the equipment also decreasing equally. The carrying amount is what the equipment is worth at that moment.

Required Identify how your classmates answer could be substantively improved.